In late May, the working group – established by IFC and the Lao National Chamber of Commerce and Industry – held its second meeting in Vientiane, where hydropower companies identified the following as top issues that need to be improved upon across the sector:
•Taxation and royalty payments to the government
•The need to improve regulations
•Understanding of government internal processes
•Access to finance for small hydropower projects
•Cascade management, particularly Cumulative Impact Assessment and Management
“We hope the working group reflects the views of both small and large hydropower developers as well as suppliers and service providers,” Allen said. “At this meeting, hydropower companies discovered that they all encounter similar challenges. We hope to find solutions to these challenges through future business meetings.”
Following the meeting, a representative from the Tax Department of the Ministry of Finance presented the findings of a recent study on fiscal policy options for hydropower projects. He said the ministry is setting up a technical working group to discuss potential new options for fiscal management and revenue sharing of such projects.
Hydropower developers want to better understand the extent in which their contribution toward the benefit-sharing schemes is used to help reduce poverty in Lao People’s Democratic Republic and improve people’s livelihood. They also want more guidance on project taxation, more clarity and consistency on how tax laws are applied to companies, and more equity in the taxes charged by different provinces.
“Companies need to know their requirements,” said Allen. “If language in legal documents is vague, there is room for misinterpretation or confusion.”
Members hope that they will be able to present these challenges to the Lao Business Forum and work together with the government on ways to overcome them to improve the hydropower sector.
“We are confident the working group will become an important and effective platform for dialogue between industry players and the government,” said Simon Andrews, IFC Regional Manager for Cambodia, Lao PDR, Myanmar, Thailand, and Vietnam. “Working together and maintaining a broad-based stakeholder dialogue will be important for the sustainable development of Lao PDR's hydropower resources.”
The next quarterly Hydropower Developers’ Working Group Business Meeting and Seminar is planned for September 2014. If you would like to learn more about the working group, please contact us or www.ifc.org/laohydro.